Tom Wolfe, who died last Monday aged 87, was one of the great American authors and a founder of the New Journalism movement of the 1960s and 1970s.

He was best known for his books The Electric Kool-Aid Acid Test (1968); The Right Stuff (1979); and, most famously of all, his bestselling novel The Bonfire of the Vanities (1987). Later made into a film starring Tom Hanks and Bruce Willis, it tells the story of Sherman McCoy, a Wall Street bond trader whose privileged life falls apart after he is involved in a hit-and-run incident in the Bronx that results in serious injury to a black man.

McCoy finds himself confronting a hostile criminal justice system, as well as journalists and a charismatic African-American clergyman caricaturing him as an amoral racist, high on upper-class white entitlement.

Inspired by Dickens and by Thackeray's portrait of early 19th Century London in Vanity Fair, Wolfe wanted to create a depiction of late 1980s New York City that cut across class and racial divides. In compelling, high-energy prose with an acute ear for demotic, the novel weaves its way through upper-crust Park Avenue society, the macho trading dens of Wall Street and the legal and criminal netherworld of the Bronx. It achieved near-universal critical acclaim and is frequently hailed as the quintessential 1980s novel.

It was published in November 1987, just days after the Black Monday stock market crash of October - seen by many as the hangover from the drunken bull-market euphoria of the Reagan era. Sherman's story could be seen as an allegory of the days of boom and bust. The success of Bonfire was the more remarkable given that Wolfe's medium had originally been non-fiction (it was his first published work of fiction).

In the 1960s he had been, along with writers such as Hunter S Thompson and Norman Mailer, a pioneer of the New Journalism movement, which he described as developing "a nonfiction form that combines the emotional impact usually found only in novels and short stories, the analytical insights of the best essays and scholarly writing, and the deep factual foundation of 'hard reporting'".

Wolfe liked to quote "Muggeridge's Law" - a reference to the principle promulgated by Malcolm Muggeridge, then editor of Punch, when Soviet leader Nikita Khrushchev visited Britain. The magazine had prepared a spoof article on his itinerary, noting all the ridiculous places to which the Soviet leader might be taken. The piece had to be scrapped when the official programme was released, showing that Khrushchev was being taken to the very spots suggested, prompting Muggeridge to comment that "there is nothing you can imagine, no matter how ludicrous, that will not promptly be enacted before your very eyes".

Wolfe's writing for newspapers and magazines like the New York Herald Tribune and Esquire was impressionistic, hyperbolic and loaded with asterisks. It was often crammed with popular references as well as allusions to classic literature and ancient history. Subjects included stock-car racing, customised automobiles, gangster society in Las Vegas, Cassius Clay and Cary Grant. Wolfe delighted in America and its "glow of a young giant: brave, robust, innocent, and unsophisticated".

Many of these articles were reprinted in his early books, The Kandy-Kolored Tangerine-Flake Streamline Baby (1965) and The Pump House Gang (1968), compilations that examined the new art forms and lifestyles appearing across America.

A taste for unusual experiences led Wolfe to the Merry Pranksters, a group of LSD-befuddled artists headed by Ken Kesey, known for his book One Flew Over the Cuckoo's Nest (1962).

Kesey's quest for self-realisation through hallucinogenic drugs led him and his gang on a cross-country trip in a vintage school bus nicknamed "Furthur", intended to create art out of everyday life. The trip formed the basis of one of Wolfe's best known works, The Electric Kool-Aid Acid Test, which, between details of what the Pranksters felt while they were on acid, chronicled the beginnings of the hippie movement, the rise of the Grateful Dead and the origins of The Beatles' psychedelic phase.

Wolfe himself remained immune to the temptations of the hippie lifestyle. In later years he mocked the intellectual pretensions of 1960s drug culture and stated that throughout his time with the Pranksters he never took LSD.

Indeed, the only drug he ever tried was marijuana (once).

"Wolfe's problem," Hunter S Thompson wrote humorously in 1971, "is that he's too crusty to participate in his stories. The people he feels comfortable with are dull as stale dogshit, and the people who seem to fascinate him as a writer are so weird that they make him nervous".

However, Thompson added, that didn't stop him being "an abnormally good reporter".

Wolfe's most esteemed piece of nonfiction, The Right Stuff, a celebration of American technological ingenuity, was a portrait of the postwar generation of US military test pilots, and the process by which a lucky few were selected to become Project Mercury astronauts for the Nasa space programme.

The "right stuff" meant nonchalance in the face of awful odds; in those days a quarter of all career military fliers were killed in accidents. "It was not bravery in the simple sense of being willing to risk your life," wrote Wolfe. "Any fool could do that. No, the idea seemed to be that a man should have the ability to go up in a hurtling piece of machinery and put his hide on the line and then have the moxie, the reflexes, the experience, the coolness, to pull it back in the last yawning moment - and then go up again the next day."

Thomas Kennerly Wolfe was born in Richmond, Virginia, on March 2, 1931 to Thomas Wolfe and Helen Perkins Wolfe. His father was professor of agronomy at Virginia Polytechnic Institute and editor of The Southern Planter, a magazine for farmers.

The young Tom's roots were reflected in later years in his taste for pale linen suits, elaborate hats and spats - in the style of old southern gentlemen.

Wolfe was an eager writer from a young age, and Steinbeck and Faulkner were two of his favourite authors. He was educated at St Christopher's School in Richmond and at Washington and Lee University in Lexington, Virginia, where he read English Literature. Aside from involvement in the campus newspaper he was a founder of the literary quarterly Shenandoah, and pitched for the university baseball team.

After graduating in 1951 he tried out as a pitcher for the New York Giants but was not selected and ditched his sporting ambitions to concentrate on writing, going on to do graduate work in American Studies at Yale.

Wolfe took a PhD in 1956 and set his sights on journalism. He did a six-month apprenticeship at the Springfield Union in Massachusetts, before in June 1959 joining the staff of the Washington Post, where he undertook local and Latin American reporting. In 1960 he won a Washington Newspaper Guild award for his coverage of Cuba.

In 1962 Wolfe left the Post to join the New York Herald Tribune. During a four-month newspaper strike the next year he travelled to California, where he met the Merry Pranksters.

While many authors and intellectuals disparaged the materialism of postwar America, Wolfe believed that art had always been a matter of "attention to form plus the money to make monuments to it", a matter-of-fact attitude that was reflected in his style as a writer. As one critic observed: "You could put a Wolfe novel under a steel-mill press and not squeeze a single drop of sentimentality out of it."

His political conservatism was anathema to many in the literary scene, however. When he voiced cautious support for George W Bush at a dinner party in 2004 he said the reaction was as if he had said: "I forgot to tell you - I'm a child molester."

His 1970 book Radical Chic & Mau-Mauing the Flak Catchers was an early critique of the liberal intelligentsia, while The Painted Word (1975) attacked the pretentiousness of modern art. A Man in Full (1998) - another hugely successful novel - did for 1990s Atlanta what Bonfire had done for 1980s New York.

Hooking Up (2001) collected essays dissecting the pomposity of academic radicalism, plus asides on the manipulations and liberal bias of television journalism within a wider commentary on how capitalism, liberty and the decline of religion were interacting to reshape American society.

His novel I am Charlotte Simmons (2005) looked at the mindless hedonism of modern American university life. And in Back to Blood (2012) Wolfe applied his satirical pen to Miami, revisiting familiar themes of race, class, status and power. Reviewing the novel in The Independent, Simon O'Hagan observed that with Wolfe's fondness for multiple ellipses, capital letters with exclamation marks and his own punctuational quirk, the multiple colon, "Back to Blood dazzles so much that you might want to read it through dark glasses".

Wolfe's last book, The Kingdom of Speech (2016), an exploration of evolutionary theory and language, was dismissed by The Guardian as "a bonfire of facts, reeking of vanity".

In 1978 Tom Wolfe married Sheila Berger, who survives him with their son and daughter.